The loonie lost more of its lustre Friday amid a strengthening U.S. greenback and weak crude prices.
The Canadian dollar was down 1.04 cents at 85.16 cents US at midday on the first trading day of 2015.
The loonie had finished off 2014 about eight per cent lower, falling 7.8 cents US between Jan. 31 and Dec. 31. In contrast, the American dollar had strengthened last year as the U.S. Federal Reserve wrapped up its massive program of buying bonds and mortgage-backed securities that kept long-term interest rates low.
It’s expected the Fed will move to hike rates for the first time since the 2008 financial crisis in mid-2015. Expectations are the Bank of Canada will also move to hike rates next year.
Meanwhile, the loonie also feels pressure from lower prices for oil and other major commodities.
“Oil prices are flirting with their lows and remain an important weight on CAD,” observed Camilla Scott, chief FX strategist at Global Banking and Markets at Scotiabank.
The February crude oil contract in New York dropped 98 cents to US$52.29 a barrel.
Crude prices have been on a downward trajectory since hitting a recent high of US$107 a barrel in June and have plunged more than 50 per cent since then due to low demand and a global supply supply glut.
Earlier this week, prices failed to respond to data showing a sharper than expected drawdown of U.S. crude oil inventories last week. The Energy Information Administration reported that inventories declined by 1.8 million barrels to 385.5 million barrels. Analysts had expected a decline of 1.25 million barrels for the week.
Elsewhere on the commodity markets, February gold faded $13.20 to US$1,170.90 an ounce while March copper remained unchanged at US$2.82 a pound.